Texas Housing Assistance Blog

Yes, that is true!  In fact, you are also able to roll in your closing costs as well.  Below is a list of frequently asked questions:

TEXAS USDA FAQ - QUESTIONS AND ANSWERS

Why haven’t I heard much about USDA rural development loans?
For the last few years there have been other mortgage programs that were popular and offered zero down payment and easy qualification. There was less use for the USDA program during those times. Now mortgage lending programs are much tighter and USDA RD is one of the few remaining programs with 100% financing and very favorable terms.

How much money will I need to close?
Every transaction is different. You will usually need to pay $300 to $400 for an appraisal before closing. You can ask the seller to pay all other closing costs as long as that is not more than 6% of the selling price.  You may also roll your closing costs into your USDA loan.

Will the seller usually agree to pay my closing costs?
This is very common. It depends on the real estate market in your area and how motivated the seller is. Note that the appraisal will need to be equal or greater than the selling price for the closing cost seller contribution to work.

How large of a mortgage do I qualify for?
Usually the monthly payment should not be more than 29% of your gross monthly income.

How good does my credit need to be?
If your credit score is above 620 you will have a very good chance of qualifying. You may still qualify with a lower score if your credit is reasonably good. You should not have more than 1 payment that was 30 days late in the last year.

What if I have NO credit in the credit bureaus?
You may still be ably to qualify using references for things like utility payments, rental history, monthly auto insurance, and other payment records.

Is private mortgage insurance required?
No, there is a one time 2% USDA guarantee fee. In most cases you will be able to add this to your loan if you don’t want to pay the fee upfront.

How does this program compare to a FHA mortgage?
In most cases the USDA mortgage will be better than FHA if you qualify. USDA is 0% down and FHA is 3% or more down. Also FHA charges an extra ½ % fee added to your payment and USDA doesn’t. The rate is usually similar or better with USDA.

What if I don’t qualify for a Texas USDA rural development mortgage?
It's best to consult with a loan specialist about your loan options.  In most cases USDA is a great way to acquire your new home with no money out of your pocket.

How long does it usually take to close a rural mortgage?
This can vary, three weeks is typical.

If I am ready to get started, what is the first step?
Visit USDA Rural housing development loans to start the process.